Buy, Renovate, Repeat
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|Ridge Capital Investors recently made its third and fourth acquisitions of the past 12 months, including the $20M purchase of TownCentre Commons apartment community in Brentwood. Both buys involve improving upon the previous owner's management style.|
|Managing director Trevor Wilson tells us the company is structured as a local operator, shopping in the Bay Area, where it can implement a repositioning strategy. The 137-unit TownCentre community was acquired from the original developer, which built it in the mid-'90s and kept it in excellent condition, but was managing for high occupancy as opposed to optimizing rent. ?We felt there was an opportunity to come in and implement more of a professional management strategy? and a rent schedule that was more in line with the market.|
|The company also acquired the 45-unit Mariner?s West Apartments in San Mateo for $11M, which Trevor says was a similar situation. The building, in an A location on the border with Foster City, was owned by the same private owner for more than 10 years. With both communities, Ridge saw an opportunity to lift NOI by making modest to fairly substantial improvements to the units as leases roll. Trevor estimates TownCenter Commons and Mariner?s West rents are 10% to 20% below market. With the communities 97% and 100% leased at acquisition, it'll take at least 12 to 18 months to get through all the units.|
|A number of the firm's executive team, including Trevor, came from Broadreach Capital Partners (though probably not by boat). Besides Ridge?s three apartment deals (two of them with Orange County-based capital partner Redwood Real Estate Partners) this past year, the company also acquired a three-building R&D campus in San Jose. Over the next year, it plans to invest $50M of equity in both multifamily and commercial properties, all as JVs with capital partners. The company's sweet spot is $10M to $30M for multifamily, and $20M to $40M for commercial. Trevor, whose father was an expat with Good Year Tires, grew up overseas—born in Paris, lived in Zaire, Taiwan, Ireland, Malaysia, and Belgium, where he graduated high school.|